As much as the Paris Motor Show is about important new model debuts and radical concept cars, the show is a platform for intense auto-political exchange as well.
Earlier this week, major international automakers including Fiat, Daimler, PSA Peugeot Citroen, Renault-Nissan, and Volkswagen Group came together for its annual European Automotive Manufacturers Association [ACEA] summit in France hosted by ACEA president Fiat chairman Sergio Marchionne. Mostly concerned about the state of the European economy, the automotive execs discussed matters regarding the future ahead amid economic uncertainties.
In particular, Volkswagen executives vocally challenged Marchionne in the days ahead of the ACEA meeting, claiming that Fiat would not be able to survive the economic recession in Europe without government bailout. VW CEO Hans Dieter Poetsch told reporters on Friday, "It is unclear if all carmakers will survive without government help, especially carmakers in southern Europe that produce small car will be affected." A statement clearly instigating Fiat, VW chief spokesperson Stephan Gruehsem also stated in July that Marchionne was not qualified to head the ACEA and even challenged that VW would quit the organization if Marchionne does not resign from his post.
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In response, Marchionne dared Volkswagen to call for his resignation during the meeting, in compliance with the lobbying group's governance.
Why the animosity? During an interview with the New York Times in July, Marchionne pointed fingers towards Volkswagen, blaming its aggressive pricing strategy as the catalyst for creating a "bloodbath" in Europe. Volkswagen competitively discounted the price of its vehicles to drive its market share in Europe despite the gloomy economy. While this did VW a lot of good, it also reflected a deep negative impact towards the smaller Fiat, Peugeot, and Renault. Providing her input in the matter, GM Europe head Susan Docherty said in a press briefing that no profit can be made in Europe as long as automakers challenge one another in pricing war discounts of up to 30 percent. Despite the evidence, Volkswagen denies the accusations of unfair business practices.
Of course, Volkswagen's pricing strategy isn't the thing keeping Fiat and VW at odds -- Sergio Marchionne had also suggested that in order to alleviate the over-capacity of European factories, plant closures should be coordinated centrally with the EU rather than have the decision left to individual companies. A sly play against VW, Marchionne wants to see the European Union influence Volkswagen to close a plant within Germany, something the automaker has not done since the end of World War Two.
Finally, it seems like the Fiat versus Volkswagen drama comes in threes. For years, Volkswagen has been in the market to purchase Italian brand Alfa Romeo from Fiat. VW supervisory board chairman Ferdinand Piech had already expressed interest in Alfa Romeo at least two years ago. Just this past August, VW CEO Martin Winterkorn had re-iterated the German automaker's interest. To that, the irritated Sergio Marchionne simply said, "Mr. Piech drop it, go and sing somewhere else."
Entering the boardroom with a heightened sense of tension during the ACEA meeting on Friday, the executives from the two automakers have finally shook hands and agreed to have the dispute resolved. Certainly a high-profile automotive cold-war, stay tuned as developments in the European economy continue to unfold.
[Source: The New York Times, Autoblog]
